Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the Varex First Quarter Fiscal Year 2023 Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Christopher Belfiore, Director of Investor Relations. Christopher. you, Thank

begin. You may

Christopher Belfiore

CEO; and call welcome XXXX. Corporation's afternoon President Varex me our to the first conference and our for Sanyal, year are earnings Sam quarter Maheshwari, today CFO. Good Sunny Imaging and of With fiscal

that vareximaging.com/news. of this the be supplemental presentations The supplemental webcast includes conference at accessed archived webcast can website. will that and presentation be live on Varex’s note call a Please slide website Varex’s at slide

all references XXXX. To the discussion, simplify otherwise stated, quarter year our for are fiscal first to the unless quarter of

are In fiscal addition, unless made fourth XXXX. otherwise sequentially to XXXX the stated, quarter of quarterly quarter fiscal year comparisons first the of from year

otherwise to to and Finally, fiscal all are year the references stated. year, the unless year not calendar

this differ that will statements, we advised subject Please statements be projections future during assumptions could be are our to those which based quarterly events. that and that in are with forward-looking are expectations risks about and relating and earnings These described anticipated. or the predictions uncertainties results current making release cause our on materially call, our are Risks filings from to business SEC. to actual

anticipated actual SEC update no discussion. to in speaks this as discussion obligation The Factors revise of statements this concerning could information annual that and from our in XX-Q quarterly reports to information our filings, Form date, we on of contained cause and factors assume differ materially those XX-K. including Additional report Item Risk is our results the XA, today’s on Form in or forward-looking

are posted measures measures. accordance certain GAAP is financial These our for discuss will in measures. comparable our a press they to in directly call, nor on of most We reconciliation non-GAAP provide a earnings presented not financial each financial suitable the non-GAAP On measure today’s which GAAP with, release, are financial measure website. we non-GAAP

Sunny. now call over turn the to will I

Sunny Sanyal

good everyone. and Thank you, afternoon, Chris,

$XXX levels driven operating and of supply as lower with was our good That was quarter to million and balanced anticipated. consistent for This the report result gross internal our chain We supply as a environment, sales demand, expectations. margin by while more are pleased a quarter a less first and improved initiatives. expected, what mix result in favorable we the had was were said, product than originally chain demand of

due during during this will Revenue was results quarter in that, XX%, which for in the sequentially, quarter. our declined Revenue sequentially, first and let's lower his to Medical mid the XX% segment remarks. prepared first our the Non-GAAP X%. segment XX% the margin in declined the down our while tier below year-over-year. discuss quarter revenue product in talk more quarter. With but was Sam gross products mix up expectation, was the a X% sales shift to Industrial to

primarily Adjusted EPS $X.XX. due was the ended sheet, $XX $XXX in inventory quarter. marketable million to from quarter We quarter, securities and EBITDA cash $X cash, this million the in down first the the $XXX the balance was was on million in equivalents prior million and higher with non-GAAP of quarter

our our some increased for seeing segment uncertain customers they Now market different Medical an as decreased cautiousness the Across economic modalities asses that applications. high-level let exhibiting portfolio, me you assessment product we year-over-year we of give an are based insights revenues ahead. demand are environment sequentially. XX% and environment and on into X% believe

to them are their Many shortages. primarily backlog, fulfilling material of challenges facing still due

to for products were demand globally CT demand up. was were dental radiographic to for modalities flat in other mammography tubes result, stable As soft, fluoroscopy, oncology a Demand including medical while and down. and

inspection the quarter, products. segment Demand higher Security industrial remained period across non-destructive for sequentially. year-over-year tubes to their wins converted as at strong X% by rate. in for prior into and increased detectors orders continued X% tender our Revenues us markets declined a slowly in improve Industrial strength our customers and led

history, X-ray imaging. based supplier evolution. continuing as we see Varex’s industry X-ray investment imaging imaging year. center Throughout evident we to of very at We are our customers of and the innovation we field focused to evolve the with and this is in RSNA the are long-term met on R&D component This OEMs, this in as at

the Society largest As this North to in. you attend Annual Chicago. This participate peers. participants our the November, With attendance, was pulse attended in show over of as is and we OEM event each the both a Varex customers for by a returned us Conference opportunity the conference show year well a the of presence significant of our and XX,XXX radiology Radiological may enthusiasm. know, meaningful trade our customers America This year, RSNA we the with to level take and pre-COVID in is provides markets very

to on we is well believe mainly integration woes conference a customers for product new saw their could around spectral with these stood imaging of our be our as as component significant there we opportunity in The new with how to make highlight from technology photon with Specifically, role significant centered into industrial technology medical technology their at counting our key our and products. active dose around a into our resolution, continue supplier them interested conversation for discussions a products. as customers and and photon development out future supply a counting conversations to as CT focus integrated many applications chain potential counting for progress and image systems. Photon it performance, shift technology, and the of reduction both We capabilities. was quality

in our to dynamic other this integration level some to A modalities regard interest our we high products, expect across of number continued level show customers a of given With interest of platform Azure. saw. detector customers continue using platform already detector called our are and the various we of

targeted competitive to is interest. continue radiographic at market approximately highly of market detectors, our where we the LUMEN share. segment which $XXX LUMEN million currently customers remain gain a radiographic have low Our platform detector excited about radiographic

a are of LUMEN of We working in the are number projects on and about XXXX. excited family detectors

has software been was our with software dedicated interest footprint palpable RSNA exhibit past, this it in AI to large key felt the technology. a this more to area lung While of very related year AI of A part screening.

we benefit have screening. lung software focus believe As on will aided highlighted a the proactive past, our we Veolity global AI in cancer lung screening from

Columbia. six installed locations in we in year, Last British platforms Veolity various

have well tender and could provided these prospective with customers also current lead of working with of installation test to are be in towards we continued The our tender All conversations for process new support X-ray the and runway a technologies. Ontario, systems Manitoba. a that In a process. view the to evolution involved have industry

are have With products being doubt the relationships, evolution of in dedicated a from is industry While dollars. player several years strong line that expertise some are with commercialized, critical evolving R&D imaging into is where in in no this making we arena of there over technology we customer a these a the higher and XX-years industry reality.

first quarter, the we Turning the start back as softer we're the environment. to a quarter, demand expectation, was per our second quarter demand seeing while in

we flat continue into be year. quarter in product change we favorable in that second to expect Further, experienced mix We lead slightly the quarter. the will market to expect to for up less dynamic the revenues to this the first

call the Sam. me to let that, hand With over

Sam Maheshwari

Sunny, hello Thanks, and everyone.

I'll of our comparison provide for unless of of a quarter our otherwise sequential As reminder, XXXX of fiscal the XXXX. quarter with indicated, results those first fourth fiscal

In and supply quarter, the first demand came balance. in

margin guidance. of we of expectations, million our result, Non-GAAP gross mix. midpoint product was at the $XXX reporting to EPS are XX% lower below $X.XX. our due Non-GAAP sales a margin was As primarily

First $XX $XXX and and million. XX%, compared 'XX. Medical industrial quarter revenues revenues were were the of the quarter. total were quarter seasonally fiscal revenues high revenues were down of revenues Medical revenues industrial XX% to for were our million fourth XX%

sequentially, X% by revenue This decreased at quarter. region, and seasonally Sales overall against were decreased our China XX% APAC Looking the XX% was XX%. revenue of fourth for while EMEA quarter. Americas strong a to decreased

cover results basis. on GAAP now me our Let a

compared than $X and $XX Net was the million down GAAP fully flat, basis ‘XX based million shares. on million, expenses fourth First was $XX quarter EPS was lower gross XX quarter. were margin operating points $X.XX quarter prior fiscal income $XX earnings XX%, diluted were the and million XXX of to Operating million.

for by low on primarily quarter. sequentially Gross the margin of the to margin non-GAAP results XX% driven product basis points Moving mix. XXX was down

tube demand in quarter. margin reduced the Industrial points profile. and This in margin In typically in We compared CT which quarter mix to mix basis detector certain fourth line higher segment, approximately revenue, the service carries compression caused a saw in the quarter, XXX product higher a While was the with expectations product products. changed. our of the higher-end sales margin, of segment of saw medical shift lower we

$XX or We to compared the was prior in level in a due quarter quarter. targeted stance challenges to backlog, fulfilling the of It our revenues XX% the believe spending of supply due million their R&D either range, low cautious taking environment customers some at high-end sales to XX% to chain to first flat, are QX. X% was seasonally due more shortages. macroeconomic the

to G&A SG&A was the income of expenses of approximately million, lower $XX fourth of down the in was X% due of fiscal gross sequentially. revenue, revenue. was prior to was quarter margin. quarter were million million sequentially, primarily XXXX. Operating $XX to margin Operating was a $XX result $XX compared which Operating XX% as revenue, XX% XX% the flat or million as flat compared

or $X quarter in $X first XXXX. Tax income, quarter was in pretax million fiscal of XX% of million expense the XX% the or fourth to compared

down year We as tax favorable were are rate for $X quarter increasing share, certain the on fiscal sequentially. $X.XX tax well a diluted full basis or as $X.XX non-GAAP now Net Average $XX to XX% foreign related and R&D were million earnings million. per XXXX, shares modeling due credits. tax for diluted reform items,

and million in quarter. increased Now quarter, the receivable balance by Inventory due the to to quarter on lower in decreased first days compared two million the $XX the quarter, to XX Accounts sales prior sheet. DSO turning increased $XX days. prior the to from

of increased of As days a result this, XXX days. inventory to

fiscal inventory in decrease first our is common going and $X forward. inventory it payable our While XX days million payable by expect for Accounts increase to we days. quarter, increased was to

quarter payments cash and a use of inventory, first payment We employee $X the the a Now biannual $X flow XXXX. cash on operations ended from in Net was decrease equivalents $XXX of the marketable our from increase incentive and an in fiscal quarter information. million cash, cash fourth to securities of million to coupon million, of due quarter, moving flow and with the debt debt.

end of was $XX quarter the at million $XXX cash of of XX% net $XXX outstanding million. margin million securities and marketable adjusted for quarter was and and debt sales. the was $XXX was Gross debt of EBITDA the million Adjusted EBITDA

end. quarter at Our times ratio net debt leverage was X.X

to moving quarter. for Now guidance the on second

about talked volume. hospitals good we outlook flat patient are As providing we and elective seeing fiscal procedure compared slightly revenue XXXX the prior in be year. to to to for believe earlier, we up, Separately, are

However, cascading capital and in a are payback higher over somewhat reevaluated. mix. unfavorable expenditures is This product as to us phenomenon long-term being projects

quarter revenues includes million EPS. for fiscal in non-GAAP of R&D. technology earnings year for would diluted approximately guidance non-GAAP million second $X.XX $XXX a million transfer This milestones $X.XX to $X.XX. As the are XXXX, $X equate and between between in and expected expected earnings $XXX an shares anticipated payment result are and Non-GAAP per

milestone to Our expectations of about of share due and year for gross XX%, $XX to expenses rest the $XX second Tax a fiscal million anticipated the million XXXX non-GAAP non-GAAP to non-GAAP of XX margin quarter about operating temporarily count range in range million, and of a the R&D in diluted rate high shares. of XX% are on payments. based XX%

now call questions. will your the open we that, for With

Operator

you. Thank

be now a Instructions] you. will session. conducting We question-and-answer Thank [Operator

from first Our Jefferies. is your question with Young Please proceed with Li question.

Young Li

Hey, Thanks you great. hear our alright? questions. taking right, for All Can me everyone.

Sunny Sanyal

Young. we Yes, hear alright, you can

Young Li

customers to maybe impacted? well? some as comments. bit it right, up cancellations on are I more upon wondering holding All like that of more, customers' from some seeing And mean, expand which was can a perfect. just or end markets, maybe cautiousness geographies if start are the sounds deferrals your better? I more what's I little guess you products,

Sunny Sanyal

missing. is without rates get parts we've can't detectors; from with had had comes every they've door, customers Sunny. from that them. other this a offs order not the them conversations These they're Hey, we've intake The us with just tubes call that to they're out the we're as they in seeing of some on or missing and cautiousness And sitting the we general are their that actual and components exception, backlog conversation indicated customers, of systems component that they're because the of building. that these in whip in they're that our our are that call softening

-- the to orders some and of their to rebalance inventory and that's us. them So causing enhance

the indicated driven to at of that's softening. Now rest that year us what's seeing forecast we're for the look our some and we've

Young Li

helpful. more the you great. if right, seeing on during quarter? the And the take has is maybe sort ground guess, that that think you I I I COVID and do important. All January? the attractive changed, might market what how Very long normalize? related on how guess are any, to to and And of one disruptions hearing in China market guess,

Sunny Sanyal

get seeing out China, our COVID, product of trouble customers. and They're for most with disruption people there of all, in of across we're door. the the work what first Li, to getting was board

it of with it tied to that but through case, described it, I out So managed were motor to we labor. of a the there things We lot also the -- get is unable door, somewhat as to their situation product all was in of deliver needed. was similar a earlier

of demand our Chinese growth and terms lot healthcare. continues buying traditional more year, is In the some rates. of although strength -- the [kinetic] well been be CT on we've government traditional expect to CT in we doing There's very CT there'll buying from (ph) and been CT. a that This investment heavily their with heavy going China reinforce and in just down softening to and in

healthcare overall no CT expect early slowing we continue. there's signs, of investments indicators, again, will in down So early buying sign of and

there's is new R&D new that out bring get sockets wins we One right? way, as and Chinese continued activity. of OEMs lot two-pronged, new a it's these a the through us, been for activity By models. continue the And to with design

prong first bit prong -- a one China. of sockets second sockets new and into new sold So is is quite now the we've

future. from stream help revenue to replacement their and expect the continue us should We that in

Young Li

Appreciate in the I'll get color. right, All back great. queue.

Sunny Sanyal

Young. Thanks,

Operator

Thank you.

next proceed with is Please your Our from CJS Securities. question question. Larry Solow with

Larry Solow

good or afternoon good and Thanks Great. evening.

revenue demand Just the lower a high the the from on least on outlook. follow-up a somewhat the questions or just of at level

the just whip. the it's make it are continuing slowdown? next a flow guess. in trying somewhat orders? to the does that that newer there So step? like, kind chain capital issues guess, -- So, things how spending are sort does this orders and trying slow bit there. phenomenon, the longer? seems up still you reassessment. of OEM mentioned out to over the it's maybe But to of things. caught That that a like some connect expenditure I'm to good, like Is It are just I figure And of I down a just so also sounds dots OEM this little I hospital supply a combination seems of be Just hospital that does like guess

Sam Maheshwari

hospital elective This So, volume you they're know and volume. to to history, so particularly are procedure CEOs, hospitals from they Larry. are so patient is what profit are procedure Yes, seeing we And what say, as CapEx quite are we hi, their expenses prior very in is the and pressure, that we elective what saying volume saying -- sense Sam. somewhat that hearing they they connected the the to although overall. running are is good under are the high. from have And tremendous

this And heard is their hospitals. from so at United profits, more States the based looking what And are maintain everything. order to they in we've

probably hearing look and we longer they term that is their can ROI as what And their better. volume, Those cetera, that et delayed. can capital this being higher taken in of being And scrutinizing scenario, expenses is of And or at care of. manage in deferred patient that expenditures type capital much everywhere they also they're projects increase it, layout. already are are anything terms are which

higher believe over little there. higher That's is bit the cascading happening to products and end causing push we that a it's that of So on we what or is believe out end machines over us.

one we are we but mean. Of that's course, step what removed,

Larry Solow

Right.

Okay.

maybe like -- long that's customer patient whatever and -- I around hold -- never CT volumes run. But very sure demand market guess business? machines to or is So decide to a couple end can I in guess drive can behavior all But it can shift the they sounds based quarters. your of obviously for on in decide hard less well you it’s long-term to

on I this centers so then out. just that CT. CT terms initiative machine And including little then I still they're centers to CT build just in freestanding centers to China, just behind get was trying a these the in sort feel I of are better all XXXX that. or of like have that govern, And thought on imaging -- read China in the put accelerating

So to like slowing that catch two to years, up how up as down me, fast at to that would noticeably least. it slow? guys be you Like, doesn't they'd where seem

yes So get I'm trying to just more, color a little on that.

Sunny Sanyal

very growth the look our Yes, China, you growth of at buying. terms been if that's high XX%, XX%-ish of in in type clip at

There's is in not of it But to New slowing We're seeing So holiday this of a China. so trend. hard Year, slowing investment. month not a government month general, seeing a in we're healthcare. expansion in call

continue we is so of oncology. just as it CT are and Those and look We to we I and same. the up. CT strong is it are pop starting in to behind but cardiovascular the trends, If be are bucket that the to -- trends that softening how same So right going becomes beyond putting XXX modalities global continues part newer at the probably China in can't to see of quarters. continue to can but That's question ahead, pace? a long see think is going that, the that -- it we're couple

remain continue prospects overall, of us for strong. to China So

Larry Solow

Okay. That's fair.

forever, that. -- you a I XX% growing get I I grow can't growth rate. just So XX%, mean, mean,

clarify stuff New And quarter just of COVID sort QX we normally a and slowdown Year. of talk growing selling that related there's Chinese more and then they in that then is because from or overtime is QX? then calendar but I know other in and whatnot still So, some shutdowns the know that, did manufacturers manufacturing accelerated there.

CT So during impacted always of the it's been COVID There of over heart But kind the of a the feel guys whammy. couple shutdown. out I by years haven't the even that is much double -- you last like COVID. build

or quarter for So was on that play your did that outlook? any -- have this quarter's this results

Sunny Sanyal

Sam. ahead, Go

Sam Maheshwari

Yes.

medical the Larry, exempted So products through process. all that were

there not disruption, so somewhat but major. And was of a yes,

produce We last the many continue through quarters. all to

-- was something impacted us so it And very neither a big not was it that much.

And that so we not are for so we've to way. them. exempted significantly our and would through impact And opening were expecting up that, continuing did increase that either, us not because significantly said, it been as I ship us produce and products really

Sunny Sanyal

operations stable and this were our customers. with our during And so time

Larry Solow

Yes. Right.

sounds any you Okay, guys down costs Or like if years a slower, -- good environment. little revenue still sort I'm just squeeze you in are just just pull? couple where the keeping direction. last right can I inflation more, there of it aren't job and of trying a labor to tough fair, but hopefully guys hurt in set; could costs leverage one to can maybe those you are going done in you

offsets you over that could slower, not much -- the outlook revenues is next if you or So side? a you do you can on maybe of could just there sort few quarters is little any

Sam Maheshwari

those levers, are Yes, Larry. certain levers, is associated timeline I there so a but with there think always

Freight we price December get right that's XXX of hurting price the on And points speak that freight the drag. P&L, increase January. about P&L, beginning improve the us That's improvements cost the was kind than quarter, to as is basis price cost is in on sooner since drag the now. happening cost happens realized what's high. So

points drag that So about on margin. our basis a gross was XXX of

freight So hopefully improve. months, of in begins couple to

to half I'm mix very difficult basis XXX the gets And mix and difficult from we I'm shorter-term is points. is We maybe is predict Mix and or to control, about phenomenon is talked hoping the about half impacts impacting onwards. mix, -- us to in how but a second and improve that thinking. it first

margins terms and us laser improving on are and So get have overall manufacturing focused they supply financials, they a our are, our a of in pressure and bit improving us steadily few chain gross little now efficiencies we months. for been that improving improving eased

our efficiency eased, So come as that play. gets should back into manufacturing

the we up And as are prepared said so flat in remarks. we slightly volume, expecting our still to

a maybe the mix offsets we hopefully still cause us, as more is as but be back. go four drag it for not efficiencies thought the three a price gets And manufacturing few quarters or So but as much in that ago, thinking about I'm months -- shape. comes positive it by, we would

our high-priced And some our inventory in have then finally, chips will roll through. that semiconductor inventory, in we

margin is high-cost that's by cost the drag calendar So looking and my have I'm the it. inventory rolled the thinking the year, how -- of through at end chips price high and

Larry Solow

guys. I appreciate And great. That's that Okay. again, color. Thanks

Sunny Sanyal

you. Thank

Operator

Thank you.

Our Suraj from question your question Kalia proceed is with next with Oppenheimer. Please

Suraj Kalia

Sunny, hear me Sam, can you alright?

Sunny Sanyal

can, are you? Suraj. How we Yes,

Suraj Kalia

well. Hope guys are you

So I Sunny, could. maybe Sam, obviously commentary outlook. I about made specifically, lot Sunny, and contrast, compare if you to guys forward-looking want of a

So from wasn't quite GE correctly, across the caution. imaging at the in look presented bullish And if they commentary level of cash outlook that a remember spectrum. sound if right, of there and I terms Healthcare, spend, you

sort forward-looking of revenues relatively are your portion of You a reconcile? contracts, a significant help have guys us recurring

on there guns hand, hand, guys, -- caution in some of players this is the but missing its What and you picture? blazing. one other the bigger are On from we are

Sunny Sanyal

Sam color. ask more to add I'll get I'll and started

that they that quarter, yet, bookings been say, of the of ship Our right and shipped to OEMs order right? able So quarters. with they're if haven't had on cycles ours are to delivery our strong they order a where -- includes let's sitting versus their slightly haven't OEMs their are schedule couple and orders of components. last yet, stuff now And their of different, inventory

that expect as future call we and in already in quarter input, is certain that So softer the whip amount moves of as then current be has might than it is offs progress, has order -- our our because the quarters. is for us would their -- Then slower, system, it. through -- moves slower stuff output

OEMs we we're as QX, are sit softness, their whips. of in position our in sitting that I So think working because through expecting that

so by, then up goes as whip that year. progressing as the we I And then time clears, end -- think through as

environment our why -- look larger and products. hearing are So did they're what and making bunch the rates customers delivery of, revenues the as is into like all then the to of scheduling that's at hands of at starts is with of recessionary up that customers. versus some we're trouble going we their between, the in from because having half. we're And The also run mind, growth, are more budgeting that we're the capital saying modality process towards products math, to this be flattish second up it to from and looking likely way then as of in the sort smaller we

priorities other because But squeeze different -- our CapEx getting and anything variety customers. modification out, competing that scheduled of out requires further is of at their facility

to and further does But this cautionary that and hence we picture as for get visibility, so we visibility paint this look we worth. paint picture quarters note. So we're trying two a all is with much out, to what our try only of ourselves

Sam Maheshwari

months to to nine are are not is or hospitals, months to whereas are to of six we I think backlog, customers our six also I here backlog. XX XX of six belief carrying my that like that nine is four add -- hospitals carrying would to Suraj, sorry, to understanding carrying

backlog, enables way to buffer and the customers. customers. backlog be the would Whereas customers kind one is difference also a their see So bit of think less through our that us of That with we sooner. about quarters between us to our to two than the ship it

Suraj Kalia

for Sam Got back specifically you, I'll hop queue this. after it. And into

of softer comments Was missed terms any be additional for you questions. DSOs, my Sam. customer it, taking You they any our greatly shift some thank expectations. made I there in a margins. Maybe than terms, credit color in Obviously, little Gentlemen, would appreciated. the line-item gross came

Sam Maheshwari

any there in one now DSO. really change wasn't customer Suraj. DSO, remained Thanks, largely terms days, of increased Yes, or or so flat. credit two by

the credit point an customer this at not at credit here. play think is that of issue or type I or

our also well come As I and margin did mentioned the expectations, a visibility as us very is for us. that for below can mix. change mix was on difficult mostly around that gross to And get it the and

bit mix to So that gross than our the caused in lower really it was expectation. a margin come

And QX thinking that is. I'm same are right, after what mix with should our we and back we point. back -- QX, somewhat this should are thinking But current that's believe thinking our guiding unfavorable at mix mix is again -- improve we hoping if come

Operator

Thank you.

Anthony Mizuho Our question. next Petrone question is proceed with from Please Group. with your

Sunny Sanyal

Anthony, we can't hear you.

Anthony Petrone

in other Oh, Europe was currently better apologies. like geographically. a maybe to Maybe current and similar Sunny afternoon, it on it it to broad-based? and the words, And trends China, and the in muted. a here, staying little specifically little in trends, splice through you're bit quarter. Sam. the bit just In Good outlook. theme that going whether really U.S. COVID as be of sort they're Line relates the finer It sounds seeing it although is

it tune acute to faring little headwinds the a have in acute in geographically, just you're hearing from the then that in Are a maybe How customers Europe? more China? more they are fine So are And follow-up. they U.S.? I

Sunny Sanyal

more it broad-based, The say. Anthony, see is by right in variability now modality. I fairly feels we would Sure.

don't felt, And was are work. And dental, heavy questions by helps as the So I The down. saw these then your require modalities these that the the in other and they're fluoroscopy strength way, CT a to for flat to those, by much of And geography. high dental, pretty modality. CT our answer mid-tier lot model. soft, non-CT we all price modalities if customers by modalities, like that and did and of we are more regions oncology world. points in in -- not -- know

their is softness there. this expecting -- and level into dramatically China we're or thing tied cyclical not just of probably strength anything issue a And some just is a that different all consumption COVID

Anthony Petrone

bit. AMD and half, Intel in chip And guidance the the just toward be and relate then that back year, for some but I out your of first to maybe the a in to end near-term expect improves of the some outlook more chips full-year headwinds some half lingering loaded? the back more pressure companies of the should XQ, called as loaded we end of instead you mean, front

Sunny Sanyal

else one to process. about be comment. ahead we everyone OEMs, just days XX, tend Because of sit supply in of XXX Yes, the quick We where chain right? of ahead

they're for currently up So clearing six only their you if can bit stuck open so. months or half. start end up a us that's to up the whip because in backlog unknown, see again, the on, But that will things second OEMs then

Sam Maheshwari

Yes. And perspective question can to us pricing the was on it cost how then, if also add referring then the goes cost side. I to AMD or and Anthony, side Intel, your

We -- out go when just not also procuring FPGAs, are we many are we we years. chips, kinds chips, -- all of

-- cases I months. and some even XX many beyond So years, in XX to months and mean, XX

of second would we So be course, be chip that in procuring would favorable. as then improves the situation half, what

end And that, chips is based an that that Young answer high-cost we now, the they are through. is in calendar is by have by already rolled inventory would are I that most cost in of at what I -- to projections, think and this high on towards right inventory have through now rolling what But and question our in before of mentioned year.

help saying in us would But cetera, the future situation. periods. et definitely AMD, that our that's whatever Intel, So are

Anthony Petrone

get very Thank you. much. in Thank you queue. I'll back

Sam Maheshwari

Thanks, Anthony.

Operator

your Sidoti Our Sidoti question. is question Please Company. with with & Jim next from Instructions] [Operator proceed

Jim Sidoti

afternoon. questions. good taking Hi, for Thanks the

have And you First year? inventory, stock the guess are have issues XXXX? fiscal at you key one now? for inventory, level, I the in questions, the any won't confident that of now remainder you two out this you Do the have you on increase for all inventories that need why components

Sunny Sanyal

Yes, Yes. Hi, Jim. Jim.

So there are least for now. and a quarters has for a few increased couple at of for in growth inventory reasons inventory

QX, So higher and positioning as planning for accordingly. a growth inventory our so we were we rate were began we

in and seasonally do to low that's demand Going to supply I supply forecast you, we we projections are forward, adjust new the will demand quarter revenue because somewhat on that planning. are it more But new us, now QX side is and adjust largely want balance. or right remind and for a

mostly a QX the levels. So demand results reflection of the were

an go even on have to management from inventory an But perspective, we keel.

at inventory five the many Generally, has performance look if about million. last grown QXs inventory if our you look by four, you at So there. $XX -- in and years prior

by for in QX, QX ended in generally where QX, it high $XX inventory quarter QX So grows QX. us. and the generally It's is million grow because on we in

from So I is that unusual $XX do an growth But high a already. for accept bit million not inventory us was inventory perspective. growth of

as because towards then were going adjust and higher now revenue down and we -- as because revenue. but should bit is revenue said, actions, so guidance so of our partially, adjustment little to midpoint driving And of I QX our than growth also the a higher And come we're it and it. actual

all help So should those forward. of bring going things to inventory down

situation the that's I inventory. Jim. your So answered hope, I on question,

Jim Sidoti

see year. positive I assume the Okay. the would for Yes, and up yes. from that, you'll -- operations following cash flow And on remainder of so we then

As that to inventory? work you start down

Sunny Sanyal

remaining thinking inventory a quarters. should -- that, but generally, inventory I performance cash opposed to provided, are could in general, downward we operations to do in as cash provide positive but could say the pressure factor right, for -- cash company guide Jim, for In you That we to successful response be I good bringing down. be a balances. bake from that in flow guide you're of should But the not cash or cash. to on that the should not provide general, not a

Jim Sidoti

update Okay. India? into Southeast venture expansion And Asia then is Micro-X joint and and the the with on there any

Sunny Sanyal

Yes.

we on Jim, that we announcements done. the the had Micro-X that So Micro-X is -- question,

It to five that them for financed R&D acquisition milestones way. the through than pay at in a way through is technology way, transfer. have In look you for P&L. it could We the a

And So then that remaining would this we a and is to view after completed. are one operating be completed QX two completed QX. I higher. was guidance why at the two specific in milestones when milestones a have not be more milestone expecting be in do time is we are bit would expecting more left; our two That expense milestones

collaboration. So -- that on that on that's

Southeast Asia Is initiatives I India. second really to Asia, then our And believe referring and your that right? in question that you're South about

Jim Sidoti

Right.

Sunny Sanyal

Yes.

this the progress at we've certain time; in So to land. made progress. incremental government We've for making payments India, we're made acquiring the

completing the the phases we of payments and are towards final agreements just now getting trying we the are made position in that done. Hopefully, purchase. work have and of to We type those

say. And months, months, so XX I out good things that progress is would to full speed on of more in initiative like that XX having to initiative. And come look XX forward

Jim Sidoti

me, last expense regarding made Okay. repeat And the for you share then can second interest the comments one just count for quarter? and you

Sunny Sanyal

Yes.

count, for or XX -- purposes, terms between guidance given million toggles XXXX ASU shares. of because that, to yes, our EPS or share due EPS shares XX count million our calculation share for of range In used

the EPS, second shares. are range QX we then for for And question, what's using XX So million the guidance Jim?

Jim Sidoti

The expense. interest

Sunny Sanyal

just whatever X% but that any at I rate. QX note. point. on yield they about debt from high provide interest on Interest did expense, expense, would carrying, this should about at convertible at $XXX model, not That's on is and guidance No really, least million I X.XXX interest $XXX are million change we

payable that to to that in the just you, both want debts I So our is heard I quarter. should just coupon want comments, on the you continue. maybe remind same remind you

QX. So we coupon in pay payments QX and interest

And so what you're is maybe asking. that

cash expecting So expense course, a for we're payment in but recognize not QX of would the QX, coupon over we that.

Jim Sidoti

right. Thank All it. you. Got

Operator

you. Thank

with your [Indiscernible] Please Our Mizuho Michael with Securities. from next is question. question proceed

Unidentified Participant

you, couple of fair think to -- a are the conference until guys at. of cap of just claw in closer caught you Hey, the have left. the that? guys. about you one maturity? were cash I sort Are you and are that or convert stockpile thinking are cash your to structure at at cash some recent are capital you carrying guys structure? comments I amount you doing? saw have you equity And I How viewing Just you've know been? looking How then the a bonds available you how that use Or regards going times; of, to debt

Sunny Sanyal

Yes. Thanks Mike.

we that operating at quarter. of we $XXX said to total and end about keep reported cash want have cash So million of December what the as $XXX of million we cash

have more for. are levels cash time, that to carrying this not I compared the cash that that much to do carry we would we So at like

our operations. is cash general Just across various want geographies. I you distributed to that remind

and multinational movement a sometimes bad of consequences. are have company tax cash, cetera, We may et

And so as a result, cash is not at one place.

that down So one yield notes. of for our that calendar pay pay that said, we is comment year, in tranche of your can is high to XX% us true. possible Every terms

so approves about debt our an to is we to when Board in this us pay cash and Directors of that. million, that $XX So pay down gives about sufficient at that point that opportunity and $XXX as million have provided down

pending those two can things, do that. we So

that us. have is for that retiring a We priority highlighted high

towards And we as we look cash. that typically, generate said, business, our

our to. what the when improves like get about At execute When right, to, down bring on Depends cash can right now, is are the the towards and that it as the like operations various to we time environment is from company. $XXX debt levels. would about on time, that? when levels but the overall cash right is something we million that. our $XXX for We would million. So like factors, overall, by bring Right we the balance. down would And to debt

Unidentified Participant

that both then and And QX QX. mention coupons are you your great. quarters Okay, did in same so the coincidentally

a So because right, doesn't saw the paid. coupon quarter, relative sort cash QX, QX should be right, to sort influx, this we of of what get

be watermarks cash sound right? and does high on QX, QX your that going So generally to

Sunny Sanyal

tactical, tactical general, is general, would from is that on it and but cetera. make direction, movements. the your sure is of have to from windage AR, pertains to sufficient that, But In right. AP, But your we right. thought then perspective, in thinking that et right in Mike. terms like modeling And we in general, prospective over a But

Unidentified Participant

very Well much great. you my for question. taking thank Okay,

Sunny Sanyal

Mike. you, care. Thank Take

Operator

Thank questions any I'd floor the like you. time. turn for Belfiore to at back further Christopher are over comments. to There no this closing

Christopher Belfiore

Sunny, Great. you do comments? any have Thank you. final

Sunny Sanyal

Yes. Thank you, Chris.

the as stable we So outside Economic from as continue the creating uncertainty -- the industry your taking -- and effort the as stable mean, a for for a you. the us caution our Varex. healthcare very proud And employees is we see over appreciate interest the I quarter gross But this join in from -- as revenue to I healthcare the grower we of the to on in for joining various continued making uncertain us in pressure globally environment. I'm was daily time basis a mix. are in expected industries. industry, long-term. Thank of you're today largely participate across and margin closing, view

Christopher Belfiore

supplemental our and code replay through in Thanks, our this February from or call of accessed questions will XXXXXXXX. The Sunny. at XXX-XXX-XXXX slide is goodbye. conference website. archived U.S. and in by be from you earnings And all A website anywhere XX be for vareximaging.com/investors The and thank today. participating XXX-XXX-XXXX will and can webcast available replay conference our be presentation access your non-U.S. or on the quarterly you conference calling call locations. Thank

Operator

conference. today's concludes This

You participation. your you may at disconnect this your for Thank time. lines

Varex Imaging (VREX) 31 Jan 232023 Q1 Earnings call transcript